WASHINGTON (Reuters) – U.S. companies would get another year, until 2007, before they have to start following stricter pension funding rules under legislation approved on Wednesday by a U.S. House panel.
The House Ways and Means Committee approved the bill on a vote of 23-17. It aims to repair the underfunding of traditional pensions and avoid a possible taxpayer bailout of the federal agency that insures pensions, the Pension Benefit Guaranty Corp. (PBGC).
Unlike a version in the Senate, the House bill contains no special relief for distressed airlines with underfunded pensions. Ultimately both chambers must approve the same legislative language before a bill can become law.
The House bill previously had cleared the House Education and Workforce Committee with a 2006 starting date. But Ways and Means Chairman Rep. Bill Thomas, R-Calif., said on Wednesday that a year’s postponement was needed “given the difficulties of putting these (pension funding) rules into effect.”
Thomas proposed the one-year delay as part of a package of changes to the bill which the committee approved before voting to send the entire measure to the House floor.
Also added was a provision penalizing companies shedding traditional pensions on the PBGC while in bankruptcy. They would have to pay $1,250 per plan participant to the PBGC in each of the first three years after emerging from bankruptcy protection.
The Senate has already approved such a penalty as part of that chamber’s budget legislation.